It will always be saved.
The Value of Nothing: Capital versus Growth - American Affairs Journal
Throughout 2021, U.S. stock market valuations have hovered near all‑time highs. In June, the unadjusted price-to-earnings (P/E) ratio of the S&P 500 index eclipsed the tech boom record of 2000. Many other asset classes have attained, or nearly attained, record valuations as well. Stratospheric valuations may be partially attributable to the unique circumstances surrounding Covid-19...
Why the man behind 'The Hater's Guide to the AI Bubble' thinks Wall Street's hottest trade will go bust
The A.I. Boom and the Spectre of 1929
As some financial leaders fret publicly about the stock market falling to earth, Andrew Ross Sorkin’s new book recounts the greatest crash of them all.
Japan’s Nikkei Hits New Record High
The Nikkei 225 Index rose 0.8% to trade above 63,700 on Thursday, setting fresh all-time highs as strong corporate earnings and upbeat guidance reinforced investor confidence, while sustained demand for artificial intelligence-related stocks continued to drive gains. Japanese equities also mirrored a tech-led rally on Wall Street overnight, even as accelerating US inflation fueled concerns that the Federal Reserve could still opt for another rate hike. At the same time, markets remained focused on the meeting between US President Donald Trump and Chinese President Xi Jinping, with discussions expected to prioritize trade relations. Among individual movers, gains were led by Kioxia Holdings (1.7%), Furukawa Electric (1.5%), Advantest (2.8%), Fanuc (10.4%) and Resonac Holdings (15.6%). In contrast, mining firm Mitsui Kinzoku fell 11.8% after issuing a weaker profit forecast for FY2027 despite projecting higher sales.
The Dividend Disconnect
ABSTRACT Many individual investors, mutual funds, and institutions trade as if dividends and capital gains are disconnected attributes, not fully appreciating that dividends result in price decreases. Behavioral trading patterns (e.g., the disposition effect) are driven by price changes instead of total returns. Investors rarely reinvest dividends, and trade as if dividends are a separate, stable income stream. Analysts fail to account for the effect of dividends on price, leading to optimistic price forecasts for dividend‐paying stocks. Demand for dividends is systematically higher in periods of low interest rates and poor market performance, leading to lower returns for dividend‐paying stocks.
Tax and the Law of Market Cycles
<p>The signature development in financial regulation over the past two decades has been the macroprudential turn: the recognition that healthy financial conditi
The end of theory? AI and ignorance in financial markets
AI’s growing role in finance challenges traditional expectations of transparency and theoretical understanding. While machine learning (ML) models enhance financial decision-making, they remain largely agnostic to established financial theories, producing knowledge and ignorance in ways that differ from traditional models like VaR, DCF, and Black-Scholes. This essay explores the decoupling of AI models from theoretical financial knowledge and the resulting forms of ignorance. Using 22 semi-structured interviews, we investigate how ML models generate epistemic uncertainties. We focus on causal ignorance: AI systems, including those supported by XAI, fail to provide genuine causal explanations. Because understanding causation is inherently theoretical, AI-driven finance remains theory-agnostic and marked by theoretical ignorance. We explore how this ignorance differs from that of traditional models and what it implies for the role of theory in finance. Finally, we present three possible scenarios for the future of theory in finance and outline directions for further research.
Home - Financial Times
News, analysis and opinion from the Financial Times on the latest in markets, economics and politics
Why the super rich are inevitable
Why some mathematicians argue the economy is designed to create a few super rich people – unless we stop it.
The Quiet Rewiring of American Finance
Stablecoins, Treasury markets, and the most significant shift in financial infrastructure that almost nobody is discussing.
Don’t Believe the Hype — or Doom — About AI
For America’s VC-dominated tech industry, AI hype isn’t just a crazy by-product — it’s a structural part of the US economy in which capital tries to write our destinies. We shouldn’t let it.
Perpetual futures, explained
Capital efficiency for pros, leverage for bettors, rich yields for market makers, and a dangerous failure mode.
On the edge: the art of risking everything
"From the New York Times bestselling author of The Signal and the Noise, the definitive guide to our era of risk-and the players raising the stakes In the bestselling The Signal and the Noise, Nate Silver showed how forecasting would define the age of Big Data. Now, in this timely and riveting new book, Silver investigates "The River," or those whose mastery of risk allows them to shape-and dominate-so much of modern life. These professional risk takers-poker players and hedge fund managers, crypto true-believers and blue-chip art collectors-can teach us much about navigating the uncertainty of the 21st century. By embedding within the worlds of Doyle Brunson, Peter Thiel, Sam Bankman-Fried, Sam Altman, and many others, Silver offers insight into a range of issues that affect us all, from the frontiers of finance to the future of AI. The River has increasing amounts of wealth and power in our society, and understanding their mindset-including the flaws in their thinking-is key to understanding what drives technology and the global economy today. There are certain commonalities in this otherwise diverse group: high tolerance for risk; appreciation of uncertainty; affinity for numbers; skill at de-coupling; self-reliance and a distrust of the conventional wisdom. For the River, complexity is baked in, and the work is how to navigate it, without going beyond the pale. Taking us behind-the-scenes from casinos to venture capital firms to the FTX inner sanctum to meetings of the effective altruism movement, On the Edge is a deeply-reported, all-access journey into a hidden world of powerbrokers and risk takers"--
